Quantcast
Last updated on April 19, 2014 at 13:20 EDT

Antero Reports 2012 Results and Delivers Operating Update

March 18, 2013

DENVER, March 18, 2013 /PRNewswire/ –

2012 Release Highlights:

  • Record annual net production of 334 MMcfe/d, a 37% increase over 2011 including discontinued operations
  • 93% increase in Appalachian net annual production to 239 MMcfe/d in 2012, excluding discontinued operations
  • 73% increase in proved reserves to 4.9 Tcfe, pro forma for the sale of Arkoma and Piceance properties in 2012
  • All-in finding and development costs averaged $0.64/Mcfe for proved reserve additions from all sources in 2012
  • 94% increase in proved, probable and possible reserves (3P) to 26.1 Tcfe including 1.6 billion barrels of oil and NGLs
  • GAAP net loss of $285 million, adjusted non-GAAP earnings of $113 million including discontinued operations
  • Consolidated EBITDAX of $434 million in 2012, up 28% from 2011 including discontinued operations
  • Current net production is 390 MMcfe/d and an additional 115 MMcfe/d net is constrained or shut-in
  • 15 Antero-operated drilling rigs currently running in Marcellus and Utica Shale core areas
  • Marcellus Shale leasehold has grown to 305,000 net acres and Utica Shale to 88,000 net acres
  • Sherwood I processing plant in Marcellus currently producing 3,000 Bbl/d of NGLs
  • Natural gas hedges increased by 17% to 940 Bcfe through 2018 at $4.91 NYMEX-equivalent

Antero Resources today released its 2012 results. Those financial statements are included in Antero Resources LLC’s Annual Report on Form 10-K for the year ended December 31, 2012, which has been filed with the Securities and Exchange Commission.

Recent Developments
On January 30, 2013, Antero announced the private placement of $225 million of additional 6% senior unsecured notes due 2020 priced at 103% of par equating to a yield to call of 5.391%. Antero received net proceeds of $228 million from the offering, which were used to repay a portion of the outstanding borrowings under its senior secured revolving credit facility. Pro forma for this issuance, at year-end 2012 Antero would have had a fully undrawn credit facility and $43 million in letters of credit outstanding resulting in $657 million of readily available liquidity based on lender commitments and $1.2 billion of unused borrowing base capacity.

On January 28, 2013, Antero announced that proved reserves at year-end 2012 were 4.9 Tcfe, a 73% increase compared to proved reserves at December 31, 2011, pro forma for the 2012 divestment of Antero’s Arkoma Basin and Piceance Basin properties. Proved, probable and possible reserves (3P) increased by 94% to 26.1 Tcfe. The 3P reserves were comprised of 21.2 Tcfe in the Marcellus Shale and 5.0 Tcfe in the Utica Shale. Antero’s 3P liquids reserves increased by 170% to 1.6 billion barrels at December 31, 2012, including ethane and other natural gas liquids (NGLs). All-in finding and development costs for proved reserve additions from all sources including drill bit, acquisitions, leasehold additions and all price and performance revisions averaged $0.64 per Mcfe in 2012 while replacing 2,243% of production from drilling. Antero’s 3-year all-in finding and development costs for proved reserves from all sources through 2012 averaged $0.51 per Mcfe.

Also on January 28, 2013, Antero announced a $1.65 billion capital budget for 2013 including $1.15 billion for drilling and completion, $350 million for the construction of gathering pipelines and facilities in the Appalachian Basin (including $150 million for water-handling infrastructure, primarily in the Marcellus Shale) and $150 million for leasehold. Approximately 74% of the capital budget is allocated to the Marcellus Shale and the remaining 26% is allocated to the Utica Shale.

Financial Results for 2012
In this release, Antero’s results are presented either in accordance with GAAP or in a non-GAAP manner where the results of operations combine the Arkoma and Piceance Basin discontinued operations with the Company’s continuing Appalachian operations, in each case as noted preceding such presentation. Investors should be cautioned that this non-GAAP presentation is not representative of Antero’s future operations, which will no longer include Arkoma and Piceance Basin assets and revenues. See “Non-GAAP Financial Measures” for reconciliation between those two presentations.

Net production for 2012 increased by 37% year over year to 122 Bcfe, including production from the Arkoma and Piceance Basin assets sold in June and December 2012, respectively. The net production increase was primarily driven by new wells brought on line in the Marcellus Shale. Net production of 122 Bcfe for the year was comprised of 115 Bcf of natural gas, 955,000 barrels of NGLs and 310,000 barrels of oil. Net daily production averaged 334 MMcfe/d during 2012, and was comprised of 313 MMcf/d of natural gas (93%), 2,611 Bbl/d of NGLs (5%) and 847 Bbl/d of crude oil (2%). Excluding the Arkoma and Piceance Basin assets sold during 2012, net production increased 93% from 2011 to 87 Bcfe or 239 MMcfe/d and was comprised of 237 MMcf/d of natural gas (99%), 195 Bbl/d of NGLs (1%) and 52 Bbl/d of crude oil (less than 1%).

(The non-GAAP amounts presented below combine the Arkoma and Piceance Basin discontinued operations with the Company’s continuing Appalachian operations. See “Non-GAAP Financial Measures” for a definition of each of these non-GAAP financial measures and tables that reconcile each of these non-GAAP measures to their most directly comparable GAAP financial measure.)

Non-GAAP adjusted net revenues for 2012 increased 30% to $661 million compared to 2011 (including cash-settled derivatives but excluding unrealized derivative gains and losses and the gain on sale of assets). Liquids production (NGLs and oil) contributed 15% of Non-GAAP adjusted net revenues before commodity hedges during 2012 compared to 13% in the prior year.

In 2012, Antero realized natural gas hedging gains of $271 million, or $2.21 per Mcfe. However, due to the fact that expiring financial hedges are settled and realized on a monthly basis while future non-expiring hedges are marked to market at the end of each quarter, we realized gains on hedges that settled during the year while we recognized a small unrealized loss on future hedges as natural gas prices rose to $3.29/MMBtu at year-end 2012 compared to $3.14/MMBtu at year-end 2011.

Excluding the unrealized loss on commodity derivatives, gains and losses on sale of assets and deferred income tax benefit, adjusted net income, a non-GAAP measure, was $113 million for the year. Cash flow from operations before changes in working capital, a non-GAAP measure, increased 19% from the prior year to $307 million. EBITDAX of $434 million for 2012 was 27% higher than the prior-year, primarily due to increased production. For a reconciliation of adjusted net revenues, adjusted net income, cash flow from operations before changes in working capital and EBITDAX to the nearest comparable GAAP measures, please read “Non-GAAP Financial Measures”.

(The GAAP amounts presented below exclude the Arkoma and Piceance Basin discontinued operations from the Company’s continuing Appalachian operations.)

GAAP revenues for 2012 increased 7% year over year, to $736 million compared to $691 million in 2011. GAAP revenues in 2012 include a $291 million gain on sale of a portion of our Marcellus gathering assets. Realized gains on commodity derivatives were $178 million in 2012 compared to $50 million in 2011. Unrealized gains on commodity derivatives were $1 million in 2012 compared to $446 million in 2011. Average natural gas prices before hedges decreased 31% from the prior year to $2.99 per Mcf and average natural gas-equivalent prices before hedges decreased 30% to $3.03 per Mcfe. Additionally, average realized gas prices including hedges decreased by 8% to $5.05 per Mcf. Average realized NGL prices for 2012 were $52.07 per barrel and average realized oil prices including hedges decreased by 18% to $80.34 per barrel. Gas-equivalent prices declined by 7% to $5.08 per Mcfe for 2012, after adjusting for all realized gains on commodity derivatives.

Antero reported a net loss of $285 million for 2012 on a GAAP basis, including a $291 million gain on sale of assets, a $121 million income tax expense on income from continuing operations and a $510 million net loss from discontinued operations arising from the sale of the Arkoma and Piceance Basin assets. Cash flow from operations including changes in working capital increased 25% from the prior year to $332 million. EBITDAX from continuing operations of $285 million for 2012 was 78% higher than the prior-year, primarily due to a 93% increase in Marcellus production. For a description of EBITDAX, and reconciliation to the nearest comparable GAAP measures, please read “Non-GAAP Financial Measures”.

GAAP per unit cash production costs (lease operating, gathering, compression and transportation, and production tax) for 2012 were $1.34 per Mcfe, a 13% increase from the prior year primarily driven by increased costs on firm transportation commitments executed to facilitate future production growth. Per unit lease operating expenses decreased by 30% to $0.07 per Mcfe due to the addition of new high rate Marcellus wells. GAAP per unit depreciation, depletion and amortization expense decreased 6% from the prior year to $1.17 per Mcfe, driven by low cost reserve increases. On a per unit basis, GAAP general and administrative expense for 2012 was $0.52 per Mcfe, a 30% decrease from the prior year.

Fourth Quarter 2012
Net production for the fourth quarter of 2012 increased by 14% year over year to 33 Bcfe, including production from the Piceance Basin assets sold in December 2012. Net production of 33 Bcfe for the quarter was comprised of 32 Bcf of natural gas, 215,000 barrels of NGLs and 71,000 barrels of oil. Net daily production averaged 363 MMcfe/d during the fourth quarter of 2012, and was comprised of 344 MMcf/d of natural gas (95%), 2,332 Bbl/d of NGLs (4%) and 768 Bbl/d of crude oil (1%). Excluding the Arkoma and Piceance Basin assets sold during 2012, net production increased 90% from the fourth quarter of 2011 to 29 Bcfe or 316 MMcfe/d and was comprised of 310 MMcf/d of natural gas (98%), 776 Bbl/d of NGLs (1%) and 123 Bbl/d of crude oil (1%)

(The non-GAAP amounts presented below combine the Arkoma and Piceance Basin operations with the Company’s other operations. See “Non-GAAP Financial Measures” for a definition of each of these non-GAAP financial measures and tables that reconcile each of these non-GAAP measures to their most directly comparable GAAP financial measure.)

Non-GAAP adjusted net revenues for the fourth quarter of 2012 (including cash-settled derivatives but excluding unrealized derivative gains and losses) increased by 12% relative to the fourth quarter of 2011 to $177 million, primarily driven by a 14% increase in net production.

Excluding the unrealized loss on commodity derivatives, loss on sale of assets and the deferred income tax benefit, adjusted net income, a non-GAAP measure, was $20 million for the fourth quarter 2012. Driven by a 12% increase in adjusted net revenues, cash flow from operations before changes in working capital, a non-GAAP financial measure, increased by 13% to $91 million. EBITDAX of $111 million for the fourth quarter of 2012 was 3% higher than the prior-year quarter, primarily due to increased Appalachian production offset by reduced cash flows due to the June 2012 Arkoma Basin asset sale. For a reconciliation of adjusted net revenues, adjusted net income, cash flow from operations before changes in working capital and EBITDAX to the nearest comparable GAAP measures, please read “Non-GAAP Financial Measures”.

(The GAAP amounts presented below exclude the Arkoma and Piceance Basin discontinued operations from the Company’s continuing Appalachian operations.)

GAAP revenues for fourth quarter 2012 decreased 40% to $235 million compared to $392 million in the fourth quarter 2011. GAAP revenues in 2012 included a $90 million unrealized commodity derivative gain compared to a $313 million unrealized commodity derivative gain in the prior year quarter. Average natural gas prices before hedges decreased 6% from the prior year to $3.61 per Mcf and average natural gas-equivalent prices before hedges decreased 4% to $3.71 per Mcfe. Additionally, average realized gas prices including hedges decreased by 4% to $4.91 per Mcf. Average realized NGL prices were $52.07 per barrel, while average realized oil prices including hedges decreased by 10% to $80.18 per barrel. Gas-equivalent prices declined by 3% to $4.98 per Mcfe for 2012, after adjusting for all realized gains on commodity derivatives.

Reported GAAP earnings resulted in a net loss of $7 million for the fourth quarter 2012, including a $13 million deferred income tax expense and a $92 million net loss from discontinued operations arising from the Piceance Basin asset sale. Cash flow from operations including changes in working capital increased 58% from the prior year quarter to $107 million. EBITDAX from continuing operations of $86 million for the fourth quarter 2012 was 67% higher than the prior-year quarter, primarily due to increased production. For a description of EBITDAX, and reconciliation to the nearest comparable GAAP measures, please read “Non-GAAP Financial Measures”.

GAAP per unit cash production costs for the fourth quarter of 2012 were $1.58 per Mcfe, a 44% increase over the prior year quarter and a 6% increase over the previous quarter primarily driven by increased costs on firm transportation commitments. GAAP per unit depreciation, depletion and amortization expense increased 14% from the fourth quarter of 2011 to $1.27 per Mcfe primarily due to increased depreciation on gathering assets from Antero’s Doddridge County infrastructure build-out during the second half of 2012. On a per unit basis, GAAP general and administrative expense for the fourth quarter 2012 was $0.47 per Mcfe, a 37% decrease from the fourth quarter of 2011.

Paul M. Rady, Chairman and CEO, commented “2012 was a transformational year for Antero as we divested our Arkoma and Piceance Basin properties as well as sold a portion of our Marcellus midstream assets for a combined total of $1.2 billion. That capital was quickly redeployed into the Marcellus Shale where we added 84,000 net acres of leasehold and the Utica Shale where we established our initial position and added 73,000 net acres of leasehold. Virtually all of the roughly 157,000 net acres of new leasehold was located in the rich gas window of the two plays. In 2012 our operating team completed 64 Marcellus wells with an average EUR of 11.6 Bcfe and an average lateral length of 7,300 feet, completed our first three Utica wells with strong results, and added 2.0 Tcfe of proved reserves with an all-in finding and development cost of $0.64/Mcfe for the year.”

Glen Warren, President and CFO, added “Our 93% net production growth in the Marcellus in 2012 illustrates the execution capability of our team as well as the growth potential of this play. The combination of growing liquids production, a large long-term natural gas hedge position and low finding and development costs should lead to sustainable, profitable growth for Antero for years to come.”

Antero Operations
All operational figures are as of the date of the release unless otherwise noted.

Antero’s current gross operated production is 487 MMcf/d and estimated net production is 390 MMcfe/d, including 2,500 Bbl/d of NGLs and 175 Bbl/d of oil. Virtually all of the Company’s production is from 135 Antero-operated horizontal Marcellus wells. Antero has an additional estimated 115 MMcfe/d of net production in the Marcellus and Utica Shales associated with seven new horizontal wells that are shut-in waiting on infrastructure and a number of producing wells that are constrained and waiting on pipeline, compression or processing facilities. During the fourth quarter of 2012, Antero completed 13 gross operated wells (13 net wells) and currently has 50 gross operated wells (48 net wells) in various stages of drilling, completion or waiting on completion.

Marcellus Shale – Antero is operating 13 drilling rigs in the southwestern core of the Marcellus Shale play, including two shallow rigs, all of which are drilling in northern West Virginia. The Company plans to add an additional big drilling rig in May 2013. Antero has 485 MMcf/d of gross operated production in the play virtually all of which is coming from 135 horizontal Marcellus Shale wells, resulting in 389 MMcf/d of net production. The 389 MMcfe/d net is comprised of approximately 374 MMcf/d of tailgate gas, 2,500 Bbl/d of NGLs and 100 Bbl/d of condensate. Antero has 31 horizontal wells either in the process of completing or waiting on completion and has three fully-dedicated frac crews currently working in West Virginia along with several spot frac crews as needed. The 135 horizontal Marcellus wells that Antero has completed and placed on line to date have an average 24-hour peak rate of 13.8 MMcf/d, an average EUR of 10.5 Bcfe assuming ethane rejection and an average lateral length of 6,956 feet.

Antero previously announced the completion of the MarkWest Energy Partners, L.P. (MarkWest) owned and operated Sherwood I cryogenic processing plant located in Doddridge County, West Virginia. Sherwood I is currently operating in ethane rejection mode and recovering approximately 3,000 Bbl/d gross of propane and heavier products. Antero has committed to a second 200 MMcf/d gas processing plant, Sherwood II, which is under construction and is located on the same site as Sherwood I. Sherwood II is expected to go in service in the second quarter of 2013. Antero has also committed to a third 200 MMcf/d gas processing plant, Sherwood III, which is expected to go on line early in the fourth quarter of 2013, giving Antero access to a total of 600 MMcf/d of Marcellus gas processing capacity by the end of 2013.

Antero recently completed compression facilities located in Ritchie County that add 50 MMcf/d of compression capacity and will connect our first Ritchie County wells to the Sherwood processing facilities. Additionally, Antero has signed agreements with various third parties to provide compression in central and eastern Doddridge County that will add a combined total of 360 MMcf/d of incremental capacity during the course of 2013. This additional capacity is expected to relieve an estimated 90 MMcfe/d of currently constrained Marcellus production by the end of third quarter 2013.

Antero has completed the White Oak lateral, a 20-mile high pressure pipeline, which will transport rich gas production from western Doddridge and eastern Ritchie Counties to the Sherwood processing facilities. Additionally, a high pressure lateral located in eastern Doddridge County was completed by a third party allowing Antero to transport rich gas production from western Harrison County to the Sherwood processing facilities.

The Antero-built Canton low pressure lateral is in service and currently delivering rich gas to Sherwood I. Antero is planning the construction of a low pressure gathering line connecting third party compression located in central Doddridge County to the Sherwood processing facilities to allow for incremental rich gas gathering capacity. This low pressure pipeline, expected to go into service in the fourth quarter of 2013, is ultimately expected to be converted to a high pressure gathering line serving central Doddridge County. Additionally, Antero is constructing a 16″ low pressure gathering line in Ritchie and Tyler Counties to further expand our gathering infrastructure into higher-BTU areas to allow for delivery of highly rich gas to the Sherwood processing facility. This line is expected to go in service by the third quarter of 2013.

Antero has 305,000 net acres in the Marcellus Shale play of which only 20% was associated with proved reserves at year-end 2012. Approximately 80% of Antero’s Marcellus leasehold contains processable rich gas.

Utica Shale – Antero is currently operating two drilling rigs in the rich gas/condensate window of the southern core of the Utica Shale play in Ohio. In December 2012, Antero placed its first well on line which is currently producing to sales and has an additional 25 MMcfe/d of net production that is shut-in waiting on infrastructure associated with the two remaining wells completed during 2012. In total, Antero has completed three horizontal wells in the Utica play, and has drilled an additional four wells, three of which are currently being completed. The three wells that are currently being completed are drilled on one pad and are the Company’s first increased density pilot in the Utica.

Antero has an agreement with MarkWest to provide processing, fractionation and NGL marketing services in the liquids rich/condensate window of the Utica Shale play. As a result, MarkWest is currently constructing the Seneca processing complex in Noble County, Ohio to process Antero’s rich gas production. Seneca I, a 200 MMcf/d cryogenic gas processing facility, is expected to begin operations by early fourth quarter 2013. The processing agreement provides for the construction of an additional 200 MMcf/d facility, Seneca II, which is expected to be installed in the fourth quarter 2013.

Additionally, MarkWest is building a high pressure lateral connecting the Seneca complex to its existing Cadiz processing complex in Harrison County, Ohio in order to provide Antero preferred access to 185 MMcf/d of combined refrigeration and cryogenic natural gas processing capacity. This lateral is expected to be on line by the end of the second quarter 2013. Antero is an anchor producer and will have up to 50 MMcf/d of preferred processing capacity at Cadiz as well as sufficient interruptible overflow capacity until Seneca I becomes operational. Antero plans to place several additional wells on line late in the second quarter of 2013 when the Cadiz processing capacity becomes available. Antero is in the process of laying both low and high pressure gathering pipeline to transport its initial Utica production to connect with the MarkWest high pressure lateral to the Cadiz processing complex and eventually to the Seneca processing complex.

Antero has signed a compression and condensate stabilization agreement with a third party to provide and operate two compressor stations in Noble and Monroe Counties with a combined capacity of 200 MMcf/d as well as two condensate stabilization facilities with a combined capacity of 7,000 Bbl/d, all of which are fully dedicated to Antero. The compressor stations and condensate stabilization facilities are expected to start up late in the third quarter of 2013.

Antero has assembled over 88,000 net acres of leasehold in the southern core of the Utica Shale play of eastern Ohio. Almost all of the acreage is believed to be located in the rich gas/condensate window.

Commodity Hedge Update
Antero has hedged 940 Bcfe of future production using fixed price swaps covering the period from January 1, 2013 through December 2018 at an average NYMEX?equivalent price of $4.91 per MMBtu. Over 75% of Antero’s estimated 2013 natural gas production is hedged at a NYMEX?equivalent price of $4.78 per MMBtu. Approximately 20% of Antero’s financial hedges are NYMEX hedges and 80% are tied to the Appalachian basin. For the NYMEX hedges, Antero physically delivers its hedged gas through backhaul firm transportation to Henry Hub, the index for NYMEX pricing, which eliminates basis risk on these NYMEX hedges. For presentation purposes, basin prices are converted by Antero to NYMEX?equivalent prices using current basis differentials in the over-the-counter futures market. Antero has 11 different counterparties to its hedge contracts, all but one of which are lenders under Antero’s bank credit facility.

The following table summarizes Antero’s hedge positions held as of today:

                  Natural gas equivalent      NYMEX-

                                          Equivalent

    Calendar Year              MMBtu/day index price
    -------------              --------- -----------

    2013                         374,020       $4.78

    2014                         370,000       $5.23

    2015                         390,000       $5.40

    2016                         522,500       $5.02

    2017                         500,000       $4.40

    2018                         420,000       $4.79

Non-GAAP Financial Measures
The table below reconciles the Company’s GAAP results from continuing operations to Non-GAAP results including operations of the Arkoma Basin assets (prior to the sale) and the loss on the sale. Antero is including this presentation in order to more clearly illustrate its results of operations during the period:

                                                                                                                         ANTERO RESOURCES LLC

                                                                                                             Statements of Operations and Additional Data

                                                                                                            Based on GAAP reported earnings with additional

                                                                                                          Details of items included in each line in Form 10-K

                                                                                                                                                 Year Ended December 31, 2011                                                  Year Ended December 31, 2012

                                                                                                                                                                                  Total                                         Including                                                                            Total                                         Including

                                                                                                                                           As                                     Discontinued                                  Discontinued                                  As                                     Discontinued                                  Discontinued

                                                                                                                                           Reported                               Operations                                    Operations                                    Reported                               Operations                                    Operations
                                                                                                                                           --------                               ----------                                    ----------                                    --------                               ----------                                    ----------

                                                                                                                                              (in thousands, except per unit and production data)

    Operating revenues:

                     Natural gas sales                                                                                                                      $195,116                                       146,718                                       341,834                                259,743                                        70,602                                       330,345

                     NGL sales                                                                                                                                     -                                        34,718                                        34,718                                  3,719                                        31,064                                        34,783

                     Oil sales                                                                                                                                   173                                        15,269                                        15,442                                  1,520                                        23,730                                        25,250

                     Realized commodity derivative gains                                                                                                      49,944                                        66,654                                       116,598                                178,491                                        92,166                                       270,657

                     Unrealized commodity derivative gains                                                                                                   446,120                                       113,476                                       559,596                                  1,055                                       (45,808)                                      (44,753)

                     Gain on sale of assets                                                                                                                        -                                             -                                             -                                291,190                                             -                                       291,190

                     Total operating revenues                                                                                                                691,353                                       376,835                                     1,068,188                                735,718                                       171,754                                       907,472
                                                                                                                                                             -------                                       -------                                     ---------                                -------                                       -------                                       -------

    Operating expenses:

                     Lease operating expenses                                                                                                                  4,608                                        26,037                                        30,645                                  6,243                                        19,901                                        26,144

                     Gathering, compression and transportation                                                                                                37,315                                        50,453                                        87,768                                 91,094                                        45,089                                       136,183

                     Production taxes                                                                                                                         11,915                                         6,307                                        18,222                                 20,210                                         2,967                                        23,177

                     Exploration expenses                                                                                                                      4,034                                         5,842                                         9,876                                 14,675                                           664                                        15,339

                     Impairment of unproved properties                                                                                                         4,664                                         6,387                                        11,051                                 12,070                                           962                                        13,032

                     Depletion, depreciation and amortization                                                                                                 55,716                                       114,805                                       170,521                                102,026                                        88,720                                       190,746

                     Accretion of asset retirement obligations                                                                                                    76                                           359                                           435                                    101                                           404                                           505

                     General and administrative                                                                                                               33,342                                             -                                        33,342                                 45,284                                             -                                        45,284

                     Loss on sale of compressor station                                                                                                        8,700                                             -                                         8,700                                      -                                             -                                             -

                     Total operating expenses                                                                                                                160,370                                       210,190                                       370,560                                291,703                                       158,707                                       450,410
                                                                                                                                                             -------                                       -------                                       -------                                -------                                       -------                                       -------

                     Operating income                                                                                                                        530,983                                       166,645                                       697,628                                444,015                                        13,047                                       457,062

    Interest expense and loss on interest rate derivatives                                                                                                   (74,498)                                            -                                       (74,498)                               (97,510)                                            -                                       (97,510)

    Loss on sale of discontinued operations                                                                                                                        -                                             -                                             -                                      -                                      (795,945)                                     (795,945)
                                                                                                                                                                 ---                                           ---                                           ---                                    ---                                      --------                                      --------

                     Income (loss) before income taxes                                                                                                       456,485                                       166,645                                       623,130                                346,505                                      (782,898)                                     (436,393)

    Income tax benefit (expense)                                                                                                                            (185,297)                                      (45,155)                                     (230,452)                              (121,229)                                      272,553                                       151,324
                                                                                                                                                            --------                                       -------                                      --------                               --------                                       -------                                       -------

    Income from operations                                                                                                                                   271,188                                       121,490                                       392,678                                225,276                                      (510,345)                                     (285,069)

    Income (loss) from discontinued operations and sale

                     of discontinued operations                                                                                                              121,490                                      (121,490)                                            -                               (510,345)                                      510,345                                             -

                     Net income (loss) attributable to Antero members                                                                                       $392,678                                             -                                       392,678                               (285,069)                                            -                                      (285,069)
                                                                                                                                                            ========                                           ===                                       =======                               ========                                           ===                                      ========

    Production data:

    Natural gas (Bcf)                                                                                                                                             45                                            39                                            84                                     87                                            28                                           115

    NGLs (MBbl)                                                                                                                                                    0                                           708                                           708                                     71                                           884                                           955

    Oil (MBbl)                                                                                                                                                     2                                           189                                           191                                     19                                           291                                           310

    Combined (Bcfe)                                                                                                                                               45                                            44                                            89                                     87                                            35                                           122

    Daily combined production (MMcfe/d)                                                                                                                          124                                           120                                           244                                    239                                            95                                           334

    Average prices before effects of hedges:

                     Natural gas (per Mcf)                                                                                                                     $4.33                                         $3.79                                         $4.08                                  $2.99                                         $2.55                                         $2.88

                     NGLs (per Bbl)                                                                                                     $                          -                                        $49.04                                        $49.03                                 $52.07                                        $35.13                                        $36.41

                     Oil (per Bbl)                                                                                                                            $97.19                                        $80.79                                        $80.98                                 $80.34                                        $81.55                                        $81.48

                     Combined (per Mcfe)                                                                                                                       $4.33                                         $4.46                                         $4.40                                  $3.03                                         $3.61                                         $3.20

    Average realized prices after effects of hedges:

                     Natural gas (per Mcf)                                                                                                                     $5.44                                         $5.53                                         $5.48                                  $5.05                                         $5.89                                         $5.25

                     NGLs (per Bbl)                                                                                                     $                          -                                        $49.04                                        $49.03                                 $52.07                                        $35.13                                        $36.41

                     Oil (per Bbl)                                                                                                                            $97.19                                        $77.08                                        $77.30                                 $80.34                                        $80.05                                        $80.07

                     Combined (per Mcfe)                                                                                                                       $5.44                                         $5.98                                         $5.71                                  $5.08                                         $6.26                                         $5.41

    Average Costs (per Mcfe):

                     Lease operating costs                                                                                                                     $0.10                                         $0.59                                         $0.34                                  $0.07                                         $0.57                                         $0.21

                     Gathering, compression, and transportation                                                                                                $0.83                                         $1.14                                         $0.98                                  $1.04                                         $1.30                                         $1.11

                     Production taxes                                                                                                                          $0.26                                         $0.14                                         $0.20                                  $0.23                                         $0.09                                         $0.19

                      Depletion, depreciation, amortization and
                      accretion                                                                                                                                $1.24                                         $2.61                                         $1.91                                  $1.17                                         $2.56                                         $1.57

                     General and administrative                                                                                                                $0.74           $                                 -                                         $0.37                                  $0.52           $                                 -                                         $0.37

                                                                                                                         ANTERO RESOURCES LLC

                                                                                                             Statements of Operations and Additional Data

                                                                                                            Based on GAAP reported earnings with additional

                                                                                                          Details of items included in each line in Form 10-K

                                                                                                                                           Three Months Ended December 31, 2011                                       Three Months Ended December 31, 2012

                                                                                                                                                                                  Total                                         Including                                                                           Total                                         Including

                                                                                                                                           As                                     Discontinued                                  Discontinued                                  As                                    Discontinued                                  Discontinued

                                                                                                                                           Reported                               Operations                                    Operations                                    Reported                              Operations                                    Operations
                                                                                                                                           --------                               ----------                                    ----------                                    --------                              ----------                                    ----------

                                                                                                                                                   (in thousands, except per unit and production data)

    Operating revenues:

                     Natural gas sales                                                                                                                       $58,872                                        39,440                                        98,312                               103,125                                        11,296                                       114,421

                     NGL sales                                                                                                                                     -                                        12,653                                        12,653                                 3,719                                         4,455                                         8,174

                     Oil sales                                                                                                                                    15                                         5,136                                         5,151                                   910                                         4,548                                         5,458

                     Realized commodity derivative gains                                                                                                      19,713                                        23,098                                        42,811                                36,985                                        12,430                                        49,415

                     Unrealized commodity derivative gains                                                                                                   313,001                                        85,851                                       398,852                                90,351                                       (12,430)                                       77,921

                     Gain on sale of assets                                                                                                                        -                                             -                                             -                                     -                                             -                                             -

                     Total operating revenues                                                                                                                391,601                                       166,178                                       557,779                               235,090                                        20,299                                       255,389
                                                                                                                                                             -------                                       -------                                       -------                               -------                                        ------                                       -------

    Operating expenses:

                     Lease operating expenses                                                                                                                  1,098                                         6,991                                         8,089                                 2,171                                         3,507                                         5,678

                     Gathering, compression and transportation                                                                                                12,364                                        15,932                                        28,296                                34,149                                         6,879                                        41,028

                     Production taxes                                                                                                                          3,564                                         2,071                                         5,635                                 9,476                                        (1,907)                                        7,569

                     Exploration expenses                                                                                                                      1,491                                         1,847                                         3,338                                 6,763                                           155                                         6,918

                     Impairment of unproved properties                                                                                                         1,670                                         1,447                                         3,117                                 8,051                                             -                                         8,051

                     Depletion, depreciation and amortization                                                                                                 17,270                                        35,986                                        53,256                                36,737                                        11,375                                        48,112

                     Accretion of asset retirement obligations                                                                                                    21                                            98                                           119                                    30                                            95                                           125

                     General and administrative                                                                                                               11,370                                             -                                        11,370                                13,700                                             -                                        13,700

                     Loss on sale of compressor station                                                                                                            -                                             -                                             -                                     -                                             -                                             -

                     Total operating expenses                                                                                                                 48,848                                        64,372                                       113,220                               111,077                                        20,104                                       131,181
                                                                                                                                                              ------                                        ------                                       -------                               -------                                        ------                                       -------

                     Operating income                                                                                                                        342,753                                       101,806                                       444,559                               124,013                                           195                                       124,208

    Interest expense and loss on interest rate derivatives                                                                                                   (23,136)                                            -                                       (23,136)                              (26,464)                                            -                                       (26,464)

    Loss on sale of discontinued operations                                                                                                                        -                                             -                                             -                                     -                                      (368,713)                                     (368,713)
                                                                                                                                                                 ---                                           ---                                           ---                                   ---                                      --------                                      --------

                     Income (loss) before income taxes                                                                                                       319,617                                       101,806                                       421,423                                97,549                                      (368,518)                                     (270,969)

    Income tax benefit (expense)                                                                                                                            (130,245)                                      (25,266)                                     (155,511)                              (12,704)                                      276,638                                       263,934
                                                                                                                                                            --------                                       -------                                      --------                               -------                                       -------                                       -------

    Income from operations                                                                                                                                   189,372                                        76,540                                       265,912                                84,845                                       (91,880)                                       (7,035)

    Income (loss) from discontinued operations and sale

                     of discontinued operations                                                                                                               76,540                                       (76,540)                                            -                               (91,880)                                       91,880                                             -

                     Net income (loss) attributable to Antero members                                                                                       $265,912                                             -                                       265,912                                (7,035)                                            -                                        (7,035)
                                                                                                                                                            ========                                           ===                                       =======                                ======                                           ===                                        ======

    Production data:

    Natural gas (Bcf)                                                                                                                                             15                                            12                                            27                                    29                                             3                                            32

    NGLs (MBbl)                                                                                                                                                    -                                           248                                           248                                    71                                           143                                           215

    Oil (MBbl)                                                                                                                                                     -                                            62                                            62                                    11                                            59                                            71

    Combined (Bcfe)                                                                                                                                               15                                            14                                            29                                    29                                             4                                            33

    Daily combined production (MMcfe/d)                                                                                                                          167                                           120                                           287                                   316                                            47                                           363

    Average prices before effects of hedges:

                     Natural gas (per Mcf)                                                                                                                     $3.83                                         $3.31                                         $3.60                                 $3.61                                         $3.60                                         $3.61

                     NGLs (per Bbl)                                                                                                     $                          -                                        $51.02                                        $51.02                                $52.07                                        $31.13                                        $38.10

                     Oil (per Bbl)                                                                                                                            $88.24                                        $82.84                                        $83.08                                $80.18                                        $76.73                                        $77.29

                     Combined (per Mcfe)                                                                                                                       $3.83                                         $4.16                                         $3.99                                 $3.71                                         $4.67                                         $3.83

    Average realized prices after effects of hedges:

                     Natural gas (per Mcf)                                                                                                                     $5.11                                         $5.27                                         $3.61                                 $4.91                                         $7.55                                         $5.17

                     NGLs (per Bbl)                                                                                                     $                          -                                        $51.02                                        $51.02                                $52.07                                        $31.13                                        $38.10

                     Oil (per Bbl)                                                                                                                            $88.24                                        $80.48                                        $80.73                                $80.18                                        $77.66                                        $78.07

                     Combined (per Mcfe)                                                                                                                       $5.11                                         $5.84                                         $5.45                                 $4.98                                         $7.52                                         $5.31

    Average Costs (per Mcfe):

                     Lease operating costs                                                                                                                     $0.07                                         $0.51                                         $0.28                                 $0.07                                         $0.81                                         $0.17

                     Gathering, compression, and transportation                                                                                                $0.80                                         $1.16                                         $0.97                                 $1.18                                         $1.58                                         $1.23

                     Production taxes                                                                                                                          $0.23                                         $0.15                                         $0.19                                 $0.33                                        $-0.44                                         $0.23

                      Depletion, depreciation, amortization and
                      accretion                                                                                                                                $1.12                                         $2.62                                         $1.83                                 $1.27                                         $2.64                                         $1.44

                     General and administrative                                                                                                                $0.74           $                                 -                                         $0.39                                 $0.47           $                                 -                                         $0.41

Adjusted net revenue as set forth in this release represents total operating revenues adjusted for certain non-cash items including unrealized derivative gains and losses and gains and losses on asset sales. We believe that adjusted net revenue is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted net revenue is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenues as an indicator of financial performance. The following table reconciles total operating revenues to total adjusted net revenues:

                           Three months ended               Twelve months ended

                              December 31,                     December 31,
                              ------------                     ------------

                          2012                  2011      2012                 2011
                          ----                  ----      ----                 ----

    Total revenues
     from continuing
     operations                  $235,090             $391,601                       $735,718   $691,353

    Total revenues
     from discontinued
     operations                    20,299              166,178                        171,754    376,835
                                   ------              -------                        -------    -------

    Total revenues               $255,389             $557,779                       $907,472 $1,068,188

    (Gain) loss on
     sale of assets          -                     - (291,190)                    -

    Unrealized
     commodity
     derivative
     (gains) losses    (77,921)            (398,852)    44,753             (559,596)

    Adjusted net
     revenues                    $177,468             $158,927                       $661,035   $508,592
                                 ========             ========                       ========   ========

Adjusted net income as set forth in this release represents income from operations before deferred income taxes, adjusted for certain non-cash items from operations and discontinued operations. We believe that adjusted net income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies. Adjusted net income is not a measure of financial performance in accordance with GAAP and should not be considered in isolation or as a substitute for net income (loss) as an indicator of financial performance. The following table reconciles income from operations to adjusted net income:

                            Three months ended              Twelve months ended

                               December 31,                    December 31,
                               ------------                    ------------

                           2012                 2011      2012                 2011
                           ----                 ----      ----                 ----

    Net income (loss)             $(7,035)            $265,912                       $(285,069) $392,678

    Unrealized
     commodity
     derivative
     (gains) losses     (77,921)           (398,852)    44,753             (559,596)

    (Gain) loss on
     sale of assets     368,713                    -   504,755               (8,700)

    Income tax expense
     (benefit)         (263,934)             155,511 (151,324)              230,452
                       --------              -------  --------              -------

    Adjusted net
     income                       $19,823              $22,574                        $113,115   $54,834
                                  =======              =======                        ========   =======

Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operations before changes in working capital. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company’s ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity. The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release:

                    Three months ended              Twelve months ended

                       December 31,                     December 31,
                       ------------                     ------------

                   2012                2011     2012                 2011
                   ----                ----     ----                 ----

     Net
     cash
     provided
     by
     operating
     activities           $106,855           $67,861                       $332,255 $266,307

     Net
     change
     in
     working
     capital    (15,377)             13,398 (24,877)               (8,309)
                -------              ------  -------               ------

     Cash
     flow
     from
     operations
     before
     changes
     in
     working
     capital               $91,478           $81,259                       $307,368 $257,998
                           =======           =======                       ======== ========

EBITDAX is a non-GAAP financial measure that we define as net income before interest expense and other income or expense, taxes, impairments, depletion, depreciation, amortization, exploration expense, unrealized hedge gains or losses, gain or loss on sale of assets, franchise taxes and expenses related to business acquisitions. EBITDAX, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDAX provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. EBITDAX does not represent funds available for discretionary use because those funds are required for debt service, capital expenditures, working capital, and other commitments and obligations. However, our management team believes EBITDAX is useful to an investor in evaluating our operating performance because this measure is widely used by investors in the natural gas and oil industry to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and is used by our management team for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to a covenant under our senior secured revolving credit facility. EBITDAX is also used as a measure of operating performance pursuant to a covenant under the indenture governing our 9.375%, 7.25% and 6.00% senior notes.

There are significant limitations to using EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating EBITDAX reported by different companies. The following table represents a reconciliation of our net income to EBITDAX for the three and twelve months ended December 31, 2011 and 2012:

                                        Three months ended               Twelve months ended

                                           December 31,                     December 31,
                                           ------------                     ------------

                                       2012                  2011      2012                 2011
                                       ----                  ----      ----                 ----

    Net income (loss)                          $84,845             $189,372                       $225,276 $271,188

    Unrealized loss (gain) on
     commodity derivative contracts (90,351)            (313,001)    (1,055)            (446,120)

    Interest expense and other       26,464                23,136    97,510               74,498

    Provision (benefit) for income
     taxes                           12,704               130,245   121,229              185,297

    Depreciation, depletion,
     amortization and accretion      36,767                17,291   102,127               55,792

    Impairment of unproved
     properties                       8,051                 1,670    12,070                4,664

    Exploration expense               6,763                 1,491    14,675                4,304

    (Gain) loss on sale of assets         -                     - (291,190)                8,700

    Other                             1,076                 1,498     4,068                2,206
                                      -----                 -----     -----                -----

    EBITDAX from continuing
     operations                                $86,319              $51,702                       $284,710 $160,259
                                               -------              -------                       -------- --------

    EBITDAX from discontinued
     operations                                 24,252               55,333                        149,605  180,562
                                                ------               ------                        -------  -------

    EBITDAX                                   $110,571             $107,035                       $434,315 $340,821
                                              ========             ========                       ======== ========

The cash prices realized for oil, NGLs and natural gas production including the amounts realized on cash settled derivatives are a critical component in the Company’s performance tracked by investors and professional research analysts in valuing, comparing, rating and providing investment recommendations and forecasts of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Due to the GAAP disclosures of various hedging and derivative transactions, such information is now reported in various lines of the income statement.

Antero Resources is an independent oil and natural gas company engaged in the acquisition, development and production of unconventional oil and liquids-rich natural gas properties primarily located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. Our website is located at www.anteroresources.com.

This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero’s control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of natural gas and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC’s definitions for such terms. We use certain terms in this news release, such as “unproved properties” and similar terms that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2012.

                                  ANTERO RESOURCES LLC AND SUBSIDIARIES

                                       Consolidated Balance Sheets

                                       December 31, 2011 and 2012

                                           (In thousands)

                                                           2011                   2012
                                                           ----                   ----

                         Assets

    Current assets:

    Cash and cash
     equivalents                                                      $3,343              18,989

    Accounts receivable -
     trade, net of allowance
     for doubtful accounts
     of $182 and $174 in
     2011 and 2012,
     respectively                                        25,117                 21,296

    Notes receivable -
     short-term portion                                   7,000                  4,555

    Accrued revenue                                      35,986                 46,669

    Derivative instruments                              248,550                160,579

    Other                                                13,646                 22,518
                                                         ------                 ------

    Total current assets                                333,642                274,606
                                                        -------                -------

    Property and equipment:

    Natural gas properties,
     at cost (successful
     efforts method):

    Unproved properties                                 834,255              1,243,237

    Producing properties                              2,497,306              1,689,132

    Gathering systems and
     facilities                                         142,241                168,930

    Other property and
     equipment                                            8,314                  9,517
                                                          -----                  -----

                                                      3,482,116              3,110,816

    Less accumulated
     depletion,
     depreciation, and
     amortization                                      (601,702)             (173,343)
                                                       --------               --------

    Property and equipment,
     net                                              2,880,414              2,937,473

    Derivative instruments                              541,423                371,436

    Notes receivable -
     long-term portion                                    5,111                  2,667

    Other assets, net                                    28,210                 32,611
                                                         ------                 ------

    Total assets                                                  $3,788,800           3,618,793
                                                                  ==========           =========

                 Liabilities and Equity

    Current liabilities:

    Accounts payable                                                $107,027             181,478

    Accrued liabilities                                  37,955                 61,161

    Revenue distributions
     payable                                             34,768                 46,037

    Current portion of long-
     term debt                                                -                 25,000

    Deferred income tax
     liability                                           75,308                 62,620
                                                         ------                 ------

    Total current
     liabilities                                        255,058                376,296

    Long-term liabilities:

    Long-term debt                                    1,317,330              1,444,058

    Deferred income tax
     liability                                          245,327                 91,692

    Other long-term
     liabilities                                         12,279                 33,010
                                                         ------                 ------

    Total liabilities                                 1,829,994              1,945,056
                                                      ---------              ---------

    Equity:

    Members' equity                                   1,460,947              1,460,947

    Accumulated earnings                                497,859                212,790
                                                        -------                -------

    Total equity                                      1,958,806              1,673,737
                                                      ---------              ---------

    Total liabilities and
     equity                                                       $3,788,800           3,618,793
                                                                  ==========           =========

                                               ANTERO RESOURCES LLC AND SUBSIDIARIES

                               Consolidated Statements of Operations and Comprehensive Income (Loss)

                                            Years ended December 31, 2010, 2011 and 2012

                                                         (In thousands)

                                                                    2010                  2011                  2012
                                                                    ----                  ----                  ----

    Revenue:

    Natural gas sales                                                       $47,392                195,116             259,743

    Natural gas liquids sales                                          -                                -               3,719

    Oil sales                                                         39                   173                 1,520

    Realized and unrealized gains on
     commodity derivative instruments
     (including unrealized gains of $62,536,
     $446,120 and $1,055 in 2010, 2011, and
     2012, respectively)                                          77,599               496,064               179,546

    Gain on sale of gathering system                                   -                                -             291,190
                                                                     ---                              ---             -------

    Total revenue                                                125,030               691,353               735,718
                                                                 -------               -------               -------

    Operating expenses:

    Lease operating expenses                                       1,158                 4,608                 6,243

    Gathering, compression, and
     transportation                                                9,237                37,315                91,094

    Production taxes                                               2,885                11,915                20,210

    Exploration expenses                                           2,350                 4,034                14,675

    Impairment of unproved properties                              6,076                 4,664                12,070

    Depletion, depreciation, and amortization                     18,522                55,716               102,026

    Accretion of asset retirement obligations                         11                    76                   101

    Expenses related to business acquisition                       2,544                                -                   -

    General and administrative                                    21,952                33,342                45,284

    Loss on sale of assets                                             -                 8,700                              -
                                                                     ---                 -----                            ---

    Total operating expenses                                      64,735               160,370               291,703
                                                                  ------               -------               -------

    Operating income                                              60,295               530,983               444,015
                                                                  ------               -------               -------

    Other expense:

    Interest expense                                             (56,463)              (74,404)              (97,510)

    Realized and unrealized losses on
     interest derivative instruments, net
     (including unrealized gains of $6,875
     and $4,212 in 2010 and 2011,
     respectively)                                                (2,677)                  (94)                             -

    Total other expense                                          (59,140)              (74,498)              (97,510)
                                                                 -------               -------               -------

    Income from continuing operations before
     income taxes and discontinued operations                      1,155               456,485               346,505

    Provision for income taxes                                      (939)            (185,297)             (121,229)
                                                                    ----              --------              --------

    Income from continuing operations                                216               271,188               225,276

    Discontinued operations:

    Income (loss) from results of operations
     and sale of discontinued operations, net
     of income tax (expense) benefit of
     $(29,070), $(45,155), and $272,553 in
     2010, 2011, and 2012, respectively                          228,412               121,490             (510,345)

    Net income (loss) and comprehensive
     income (loss) attributable to Antero
     equity owners                                                         $228,628                392,678            (285,069)
                                                                           ========                =======            ========

                                                 ANTERO RESOURCES LLC AND SUBSIDIARIES

                                                 Consolidated Statements of Cash Flows

                                             Years ended December 31, 2010, 2011, and 2012

                                                           (In thousands)

                                                                       2010                  2011               2012
                                                                       ----                  ----               ----

    Cash flows from operating activities:

    Net income (loss)                                                         $228,628             392,678            (285,069)

    Adjustment to reconcile net income (loss) to
     net cash provided by operating activities:

    Depletion, depreciation, amortization, and
     depletion                                                       18,533                55,792            102,127

    Impairment of unproved properties                                 6,076                 4,664             12,070

    Unrealized gains on derivative instruments,
     net                                                            (69,411)            (450,332)             (1,055)

    Deferred income tax expense                                         939               185,297            106,229

    (Gain) loss on sale of assets                                         -                 8,700          (291,190)

    Loss (gain) on sale of discontinued
     operations                                                    (147,559)                            -             795,945

    Depletion, depreciation, amortization,
     impairment of unproved properties, and dry
     hole expense -discontinued operations                          164,993               126,041             90,096

    Unrealized (gains) losses on derivative
     instruments, net -discontinued operations                     (108,035)            (113,476)             45,808

    Deferred income tax expense (benefit) -
     discontinued operations                                         29,070                45,155          (272,553)

    Other                                                             5,255                 3,479              4,960

    Changes in assets and liabilities:

    Accounts receivable                                              (2,306)                3,854              5,511

    Accrued revenue                                                  (7,408)              (11,118)           (10,683)

    Other current assets                                                261                (4,528)            (8,882)

    Accounts payable                                                  9,779                (1,875)            (2,117)

    Accrued liabilities                                              (2,771)               17,124             14,790

    Revenue distributions payable                                     1,747                 4,852             11,268

    Other                                                                 -                             -              15,000
                                                                        ---                           ---              ------

    Net cash provided by operating activities                       127,791               266,307            332,255
                                                                    -------               -------            -------

    Cash flows from investing activities:

    Additions to proved properties                                        -             (105,405)            (10,254)

    Additions to unproved properties                                (41,277)            (195,131)          (687,403)

    Drilling costs                                                 (299,926)            (527,710)          (839,151)

    Additions to gathering systems and
     facilities                                                     (47,124)              (72,837)         (142,294)

    Additions to other property and equipment                        (2,647)               (2,339)            (3,447)

    (Increase) decrease in notes receivable                          (2,000)              (10,111)             4,889

    Increase in other assets                                           (556)               (3,095)            (3,707)

    Proceeds from asset sales                                       258,918                15,379          1,217,876

    Net assets of business acquired, net of cash
     of $170                                                        (96,060)                            -                   -
                                                                    -------                           ---                 ---

    Net cash used in investing activities                          (230,672)            (901,249)          (463,491)
                                                                   --------              --------           --------

    Cash flows from financing activities:

    Issuance of senior notes                                        156,000               400,000            300,000

    Borrowings (repayments) on bank credit
     facility, net                                                  (42,080)              265,000          (148,000)

    Payments of deferred financing costs                            (10,459)               (6,691)            (5,926)

    Distribution to members                                               -               (28,859)                          -

    Other                                                            (2,261)                 (153)               808
                                                                     ------                  ----                ---

    Net cash provided by financing activities                       101,200               629,297            146,882
                                                                    -------               -------            -------

    Net increase (decrease) in cash and cash
     equivalents                                                     (1,681)               (5,645)            15,646

    Cash and cash equivalents, beginning of
     period                                                          10,669                 8,988              3,343
                                                                     ------                 -----              -----

    Cash and cash equivalents, end of period                                    $8,988               3,343              18,989
                                                                                ======               =====              ======

    Supplemental disclosure of cash flow
     information:

    Cash paid during the period for interest                                   $52,326              59,107              90,122

    Supplemental disclosure of noncash investing
     activities:

    Changes in accounts payable for additions to
     properties, gathering systems and
     facilities                                                                $32,028              26,465              72,881

    OPERATING DATA

    The following table sets forth
     selected operating data for the
     twelve months period ended
     December 31, 2011 compared to
     the twelve months period ended
     December 31, 2012:

                                                                      Year Ended                     Amount of               Percent
                                                                     December 31,                     Increase
                                                                     ------------

    (in thousands, except per unit data)                        2011                  2012        (Decrease)                Change
    -----------------------------------                         ----                  ----         ---------                ------

    Operating revenues:

    Natural gas sales                                                   $195,116                     $259,743                      $64,627     33%

    NGL sales                                                      -                 3,719              3,719                           *

    Oil sales                                                    173                 1,520              1,347             779%

    Realized commodity derivative gains                       49,944               178,491            128,547             257%

    Unrealized commodity derivative gains                    446,120                 1,055           (445,065)          (100)%

    Gain on sale of Appalachian gathering assets                   -               291,190            291,190                           *
                                                                 ---               -------            -------

    Total operating revenues                                 691,353               735,718             44,365               6%
                                                             -------               -------             ------

    Operating expenses:

    Lease operating expenses                                   4,608                 6,243              1,635              35%

    Gathering, compression, and transportation                37,315                91,094             53,779             144%

    Production taxes                                          11,915                20,210              8,295              70%

    Exploration                                                4,034                14,675             10,641             264%

    Impairment of unproved properties expense                  4,664                12,070              7,406             159%

    Depletion, depreciation and amortization                  55,716               102,026             46,310              83%

    Accretion of asset retirement obligations                     76                   101                 25              33%

    General and administrative expense                        33,342                45,284             11,942              36%

    Loss on sale of compressor station                         8,700                     -             (8,700)                          *
                                                               -----                   ---             ------

    Total operating expenses                                 160,370               291,703            131,333              82%
                                                             -------               -------            -------

    Operating income                                         530,983               444,015            (86,968)           (16)%
                                                             -------               -------            -------

    Other income expense:

    Interest expense                                                    $(74,404)                    $(97,510)                    $(23,106)    31%

    Realized and unrealized interest rate derivative losses      (94)                    -                 94                           *
                                                                 ---                   ---                ---

    Total other expense                                      (74,498)              (97,510)           (23,012)             31%
                                                             -------               -------            -------

    Income before income taxes                               456,485               346,505           (109,980)           (24)%

    Income taxes expense                                    (185,297)             (121,229)           (64,068)           (35)%
                                                            --------              --------            -------

    Income from continuing operations                        271,188               225,276            (45,912)           (17)%

    Income (loss) from discontinued operations               121,490              (510,345)          (631,835)                          *
                                                             -------              --------           --------

    Net income (loss) attributable to Antero equity owners              $392,678                    $(285,069)                   $(677,747) (173)%
                                                                        --------                    ---------                    ---------

    EBITDAX                                                             $340,821                     $434,312                      $93,491     27%
                                                                        --------                     --------                      -------

    Production data:

    Natural gas (Bcf)                                             45                    87                 42              93%

    NGLs (MBbl)                                                    -                    71                 71                           *

    Oil (MBbl)                                                     2                    19                 17             963%

    Combined (Bcfe)                                               45                    87                 42              93%

    Daily combined production (MMcfe/d)                          124                   239                115              93%

    Average prices before effects of hedges :

    Natural gas (per Mcf)                                                  $4.33             2.99               (1.34)                (31)%

    NGLs (per Bbl)                                                 $                    -              52.07           52.07                  *

    Oil (per Bbl)                                                         $97.19            80.34              (16.85)                (17)%

    Combined (per Mcfe)                                                    $4.33             3.03               (1.30)                (30)%

    Average realized prices after-effects of hedges :

    Natural gas (per Mcf)                                                  $5.44             5.05               (0.39)                 (7)%

    NGLs (per Bbl)                                                 $                    -              52.07           52.07                  *

    Oil (per Bbl)                                                         $97.19            80.34              (16.85)                (17)%

    Combined (per Mcfe)                                                    $5.44             5.08               (0.36)                 (7)%

    Average costs (per Mcfe):

    Lease operating costs                                                  $0.10             0.07               (0.03)                (30)%

    Gathering compression and transportation                               $0.83             1.04                0.21                   25%

    Production taxes                                                       $0.26             0.23               (0.03)                (12)%

    Depletion depreciation amortization and accretion                      $1.24             1.17               (0.07)                 (6)%

    General and administrative                                             $0.74             0.52               (0.22)                (30)%

SOURCE Antero Resources


Source: PR Newswire